McLaughlin Brothers v. Hallowell

• Decision Date: 07 April 1913
• Docket Number: No. 149,149
• Citation: 228 U.S. 278,33 S.Ct. 465,57 L.Ed. 835
• Parties: MCLAUGHLIN BROTHERS, a Copartnership (John R. McLaughlin and James B. McLaughlin, Sole Members of the Copartnership), Plffs. in Err., v. L. A. HALLOWELL et al
• Court: U.S. Supreme Court

228 U.S. 278

33 S.Ct. 465

57 L.Ed. 835

MCLAUGHLIN BROTHERS, a Copartnership (John R. McLaughlin and James B. McLaughlin, Sole Members of the Copartnership), Plffs. in Err.,

v L. A. HALLOWELL et al.

No. 149.

Argued January 27, 1913.

Decided April 7, 1913.

Messrs. Edgar A. Morling, Charles A. Clark, and William H. Morling for plaintiffs in error.

Messrs. Denis M. Kelleher, William S. Kenyon, and Maurice O'Connor for defendants in error.

Mr. Justice Pitney delivered the opinion of the court:

This writ of error is sued out under § 709, Rev. Stat., U. S. Comp. Stat. 1901, p. 575, and brings up a judgment of the supreme court of Iowa, affirming a judgment of the district court of one of the counties of that state in an action brought by the defendants in error against 'McLaughlin Brothers, a Corpartnership,' named among the plaintiffs in error. The individual plaintiffs in error, John R. McLaughlin and James B. McLaughlin, who allege themselves to be 'sole members of the copartnership,' were not named as defendants at the inception of the action. Their relation to it will appear from what follows.

It is claimed by the plaintiffs in error that they were entitled to remove the cause to the appropriate Federal circuit court on the ground of diversity of citizenship (there being no question that the matter in dispute, exclusive of interest and costs, exceeded $2,000), and that the decision of the state court deprived them of the right of removal. The cause was once removed to the Federal court and by that court remanded. A subsequent petition for removal was refused by the county district court. It is the decision of the supreme court, in affirming the judgment of the district court, notwithstanding such refusal, that is now assigned for error. The circumstances of the case are peculiar and require a somewhat particular recital.

The action was commenced by petition filed by defendants in error in the district court, naming as defendant 'McLaughlin Brothers, a copartnership,' and claiming $3,000 damages for breaches of warranty in the sale of certain horses. The petition alleged (inter alia) that defendant was a nonresident of the state of Iowa, and that it was a partnership, with headquarters at Columbus, Ohio, and with a branch at Emmetsburg, Iowa. The transactions out of which the alleged causes of action arose were stated to have occurred in Iowa, and the alleged contracts to have been made in that state. At the same time the plaintiffs filed in the district court an attachment bond, and caused a writ of attachment to be issued to the sheriff of the county, who, according to the record, 'thereunder garnisheed the United States Express Company, by serving on such garnishee notice of garnishment, and made return of such service.'

Thereafter the defendants filed a petition and bond for removal of the cause into the United States circuit court for the northern district of Iowa, upon the ground of diversity of citizenship. The opening words of the petition were: 'Come now the above-named defendants, and respectfully show to the court that they are a copartnership composed of John R. McLaughlin and James B. McLaughlin, sole partners in and members of said copartnership, doing business at the city of Columbus, in the state of Ohio. That at the time of the commencement of this action, and ever since, and now, the said copartnership, McLaughlin Brothers, and the said James B. McLaughlin and John R. McLaughlin, and each of them, were and are residents, citizens, and inhabitants of the state of Ohio; . . . that the plaintiffs hereinabove named, and each of them, at the time of the commencement of this action, were and still are residents, citizens, and inhabitants of the state of Iowa, and not of the state of Ohio.' The remaining averments were in the usual form. The cause was removed accordingly.

After some time the Federal court made an order remanding it, the substance of which is as follows, viz.: 'The court, being advised in the premises, finds that this court has not jurisdiction of said cause, and sustains said motion (for a remand). It is ordered and adjudged that said cause be and the same is hereby remanded to the district court of Iowa in and for Pocahontas county, from whence the same came, this court not having jurisdiction by reason of lack of evidence in the transcript filed herein, that said defendant had been served with notice of said proceedings.'

The record shows that after a duly authenticated copy of this order had been filed in the district court, 'John R. McLaughlin and James B. McLaughlin appeared in said cause,'—but without previous leave of the court,—and filed a written motion setting up 'That they are the sole members and partners in the above-mentioned firm of McLaughlin Brothers and the sole parties defendant in interest herein, and that they are the parties and the sole parties that are sued under the firm name of McLaughlin Brothers;' and then, after averring diversity of citizenship, and that the matter in dispute exceeded $2,000, the motion proceeded as follows: 'That these parties are entitled to have this action tried in the circuit court of the United States in and for the northern district of Iowa; that the only effect of maintaining this action against these defendants in their partnership name is to prevent a removal of the action to the said United States circuit court; wherefore the said John R. McLaughlin and James B. McLaughlin move the court, (1), for an order herein substituting these defendants in their individual names as sole parties defendant herein, and permitting them to appear herein and answer and defend in their said individual names; (2) if the foregoing is overruled, then that an order be made joining the said John R. McLaughlin and James B. McLaughlin as parties defendant herein, in their individual names, and permitting them to appear, answer, and defend in their individual names.'

Upon the same date, 'The said defendants, McLaughlin Brothers, appeared in said cause and filed therein their application for substitution of parties,' etc., adopting the statements and allegations contained in the motion of the individuals as above quoted, and thereupon moving the court that the said individuals be either substituted in place of the defendants, McLaughlin Brothers, as sole defendants, or else joined as codefendants with the firm.

And at the same time the partnership and the individuals filed a petition, in the name of the individuals, for the removal of the cause to the United States circuit court, upon the same ground of diversity of citizenship that was set up in the first petition for removal. A proper bond was also filed.

To this second petition for removal and to the accom- panying motions for substitution, etc., the plaintiffs in the action filed written objections, based in part upon the ground that the individual partners were not parties to the action, and not entitled to make a motion for substitution, or to be joined as parties; that the plaintiffs were entitled to bring their action against the copartnership without joining as defendants the members of the firm, and they having exercised this option, the members of the firm were not, as against the plaintiffs' objection, entitled to be either substituted or joined as parties; and that the individual partners were not entitled to have the action tried in the circuit court of the United States. The district court sustained these objections, and denied the several motions and the petition for removal.

Thereforward the action appears to have proceeded in the district court as against the partnership alone. 'A Plea to Jurisdiction and Answer' was filed, which repeated the averments upon which the petitions for removal had been based, set up the filing of those petitions and bonds and the several applications for substitution or joinder of the individuals as parties defendant, and averred that, by reason of the premises, the state court had no jurisdiction to proceed further. Answer was at the same time made to the merits, and the action was thus brought to an issue.

There appears to have been a trial, resulting in a directed verdict for the defendants and a judgment thereon, from which the plaintiffs appealed to the supreme court of Iowa, where there was a reversal and award of a new trial. The transcript of the record as presented here is silent on the subject, but we are referred to the report of the case on the first appeal (136 Iowa, 279, 111 N. W. 428).

Upon the second trial the defendants offered evidence to support the averments of the plea to the jurisdiction, which was overruled as irrelevant. A motion to direct a verdict in favor of defendants on the ground that, because of the proceedings for removal, the district court had no jurisdiction, was likewise overruled. There was a verdict and consequent judgment for the plaintiffs for $3,755.02, which, upon appeal, was affirmed by the supreme court of Iowa (121 N. W. 1039), and the present writ of error was sued out.

Except for the opinion delivered by the supreme court upon the second appeal there is nothing in the record to show what questions were raised in that court. After referring to the first appeal, as reported in 136 Iowa, 279, which admittedly raised no question of Federal right, the opinion proceeds as follows: 'But one new question is here presented, and that arises on the following facts: This action was commenced in December, 1903. It was transferred to the United States circuit court upon the defendants' application, where it was remanded to the state court, because of want of jurisdiction of the Federal court. In January, 1905, the defendants filed an application in the district court for the substitution of John R. and James B. McLaughlin as defendants. This was denied, and since such denial both trials have taken place and more than three years elapsed, and the defendants now appeal from the order denying substitution....